TMI Blog2023 (3) TMI 1257X X X X Extracts X X X X X X X X Extracts X X X X ..... les needs to follow the provisions of the Motor Vehicles Act, 1988 along with applicable rules. And in the present matter this supply of leasing of motor vehicles falls under the scope of supply as defined in the section 7 of the CGST Act, 2017. The leasing of the pre-owned vehicle is a taxable event and the rate of tax is to be determined in accordance with serial no. 17 (VI) of notification no. 11/2017-CT(R) dated 28.06.2017 as amended which states that the tax is to be charged at 'same rate of central tax as applicable on supply of like goods involving transfer of title in goods.' And the applicable compensation cess is also to be determined in accordance with notification no. 1/2017-compensation cess (Rate) dated 28.06.2017. Meaning thereby that the tax rate on the leasing of the pre-owned vehicle is to be determined as on like goods. And the availment of the input tax credit by the applicant is subject to the conditions prescribed under section 17(5) of the CGST Act, 2017 read with the relevant rules. In the light of the proper officer's comments on the issue at hand mentioned here, it can be said that the applicant has not submitted a clear picture on the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of the applicant under any provision of this Act, the application may be rejected by the Advance Ruling Authority after providing an opportunity of being heard to the applicant. In the present case, the applicant has undertaken in form ARA-01 that the issue is neither pending nor decided in any proceedings under any of the provisions of the Act. Besides the applicable lees in the case stands paid. So, he is eligible to seek an Advance Ruling under the above provisions and the case is being heard on merits. Statement of facts as per ARA-01 1. M/s Dream Road Technologies Private Limited (hereinafter referred to as the Applicant ) is a Car leasing Company with the name PumPumPum . The Applicant provides the private number (White Plate) of pre-owned cars on lease to the individuals. 2. The Applicant is engaged in providing pre-owned vehicles obtained from different modes of supply on operating leases to its customers. 3. The Applicant enters into different Motor Vehicle Lease Agreements ( MVLA ) with its customers depending upon the type of customer. For instance, in the case of individual customers, normal Lease Agreements shall be executed. However, for o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ', as may be applicable, except the supplies which are outside the purview of GST i.e. non-Taxable Supplies. 3. Schedule II of the CGST Act lays down the transaction to be treated as a supply of goods or services. The relevant Extracts of the same are reproduced below:- ACTIVITIES [OR TRANSACTIONS] TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES 1. Transfer (a) any transfer of the title in goods is a supply of goods (b) any transfer of right in goods or of undivided share in goods without the transfer of title thereof is a supply of services; (c) any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed is the supply of goods. Thereby under GST what is important to determine whether the supply is the supply of goods or supply of services is the Transfer of title . In simple words, it could be said that any transfer of rights in goods without the transfer of title thereof is the supply of services or any transfer of title in goods under an agreement that stipulates that property in goods shall pass at future date is the supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by Notification No. 20/2019-Central Tax (Rate), dated 30-9-2019, w.ef. 1-10-2019. - (viia) Leasing or renting of goods Same rate of central tax as applicable on supply of like goods involving transfer of title in goods. (viii) Leasing or rental services, without operator, other than (i), (ii), (iii), (iv), (vi) and (viia) above.] 9 5. Entry (viia) states the applicable tax shall be the same rate of central tax as applicable on supply of like goods involving the transfer of title in goods . Technically speaking words like goods are nowhere defined in the said notification, thereby we fall back to Central Goods and Service Tax Rules, 2017. Relevant extracts of Explanation (b) to Rule-35 of Central Goods and Service fax Rules, 2017:- supply of goods or services or both of like kind and quality means any other supply of goods or services or both made under similar circumstances that, in respect of the characteristics, quality, quantity functional components, materials and the reputation of the goods or services or both first mentioned, is the same as, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registering authority within whose jurisdiction the transfer is to be effected and shall simultaneously send a copy of the said report to the transferee; and (ii) in the case of a vehicle registered outside the State, within forty-five days of the transfer, forward to the registering authority referred to in sub-clause (i)- (A) the no objection certificate obtained under section 48; or (B) in a case where no such certificate has been obtained,- (l) the receipt obtained under sub-section (2) of section 48; or (II) the postal acknowledgment received by the transferred if he has sent an application in this behalf by registered post acknowledgment due to the registering authority referred to in section 48, together with a declaration that he has not received any communication from such authority refusing to grant such certificate or requiring him to comply with any direction subject to which such certificate may be granted; (b) the transferee shall, within thirty days of the transfer, report the transfer to the registering authority within whose jurisdiction he has the residence or place of business where the vehicle is normally kept, as the case may be, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the chain of transferring input tax credit and the applicant will bear the amount of tax charged by the vendor at the time of purchase of the car. Now the applicant further leases the same car to its customers and charges GST on the lease payments. Thereby in this model applicant is able to unlock the value of assets and generate additional tax revenues on a monthly basis for the government of India. 11. In pursuance of the above discussion and of Entry no 17 (viia) of Notification no 11/2017 Like goods in the instant case shall be old and Used Cars . 12. Notification No. 08/2018 - Central Tax (Rate) dated 25th January 2018 notifies the rate of central tax for the sale of old and used cars. Extracts of the same are stated below:- In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby exempts the central tax on intra-state supplies of goods, the description of which is specified in column (3) of the Table below, falling under the tariff item, sub-hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r shall be the difference between the consideration received for supply of such goods and the depreciated value of such goods on the date of supply, and where the margin of such supply is negative, it shall he ignored; and (ii) in any other case, the value that represents the margin of the supplier shall be the difference between the selling price and the purchase price and where such margin is negative, it shall he ignored. 2. This notification shall not apply, if the supplier of such goods has availed input tax credit as defined in clause (63) of section 2 of the Central Goods and Services Tax Act, 2017, CENVAT as defined in CENVAT Credit Rules, 2004 or the input tax credit of Value Adde Tax or any other taxes paid, on such goods. The same notification has also been notified in Haryana Goods and Services Tax Act, 2017 through notification no. 28 ST Haryana Tax (Rate), dated 25 th January 2018. 13. The applicant in the instant case is engaged in the business of leasing old and used cars on operating lease and does not avail any input tax credit as defined in clause (63) of section 2 of the Central Goods and Services Tax Act, 2017, CENVAT as defined in CENVAT Cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the monthly lease fees received from customers for leasing pre-owned Cars would be determined in accordance with serial no. 17 (viia) of Notification No. 11/2017-Central Tax (Rate) dated 28-06-2017 read with Notification No. 08/2018-Central Tax (Rate) dated 25th January 2018? If not, then what would be said GST rate and HSN so applicable on the said transaction? b) Whether Compensation cess applicable to the monthly lease fees received from customers for leasing of pre-owned Cars would be determined in accordance with serial no. 42A of Notification No. 01/2017- Compensation cess (Rate) dated 28th June 2017? If not, then what about the said Compensation cess so applicable on the said transaction? PERSONAL HEARING: Sh. Rajat, Chartered Accountant present on behalf of the applicant on 10.11.2022 and enumerated the legal and factual aspects of the matter in writing along with ARA-01. Additional submissions of the applicant dated 09.12.2022: The ownership document i.e. RC gets transferred to Applicant (PumPumPum). The Applicant would be the registered owner of the pre-owned vehicle at all times for all purposes including regulatory requirements under the Motor V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which needs further investigation. As per my observations, tax rates of new vehicles are to be applicable. Further, in respect of Part (b) of clarification sought, it is submitted that compensation cess (Rate) will also be applicable on monthly lease fee as per notification No. 01/2017 dt. 28.06.2017. DISCUSSION AND FINDING: We have gone through the facts of the case, documents on record and submissions made by the applicant besides the comments of the Proper Officer, it is observed that the applicant is engaged in the business of providing pre-owned car on operating lease to its customers. The applicant has sought the advance ruling regarding the rate of tax applicable on leasing of the pre owned motor vehicles under the provision of the GST Act? The detail as enumerated in above pages is examined by the authority minutely. After perusing all the aspects of the matter al hand i.e. the factual details as well as the legal provision applicable in the present case it can be said that the supply of leasing of the pre-owned motor vehicle is for the furtherance of business. It is apt to mention here that the purchaser/owner of motor vehicles needs to follow the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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